Elon Musk’s xAI Partners with Valor Equity for $12B Capital Raise to Boost AI Infrastructure

Elon Musk’s artificial intelligence venture, xAI, is teaming up with Valor Equity Partners to secure an additional $12 billion in funding, according to a Wall Street Journal report. The capital will be used to purchase high-end Nvidia GPUs, which will form the backbone of a massive data center dedicated to training and powering Grok, xAI’s AI model. Musk has publicly stated that xAI aims to deploy 50 million H100-equivalent compute units within five years.

The MOVE comes as xAI faces stiff competition from well-funded rivals like Google, Microsoft, and Meta. Grok has struggled to gain traction, recently drawing criticism for generating controversial and racist content on X, formerly Twitter. xAI has since apologized for the incident.

To stabilize its finances, xAI has Leveraged capital from Musk’s other ventures, including a $2 billion investment from SpaceX and $5 billion in debt secured using Grok’s intellectual property. Analysts caution that the company’s aggressive spending—projected to burn $13 billion in 2025—will necessitate further fundraising, particularly as it opts to build its own hardware infrastructure rather than rely on third-party cloud platforms.